The Indian rupee opened marginally stronger against the US dollar on December 18, signalling tentative stability after one of its most volatile stretches in recent months. The domestic currency opened at 90.3700 per dollar, slightly firmer than the previous close of 90.3775, as market participants factored in sustained support from the Reserve Bank of India.

Over the past few weeks, the rupee has been under sustained pressure amid a strong US dollar, higher global bond yields, and persistent portfolio outflows from emerging markets. That pressure intensified sharply in December when the rupee breached the psychologically critical 90-per-dollar mark, a level that many traders viewed as a soft red line.

The pace of depreciation raised concerns not just about valuation, but about market stability. Between early December and December 16, the rupee slid from 90 to beyond 91 per dollar in just 13 trading days, highlighting how quickly sentiment had turned negative.

This backdrop prompted decisive action from the RBI.

On December 17, the RBI intervened aggressively in the spot foreign exchange market, triggering the rupee’s strongest intraday recovery in seven months. In percentage terms, the rupee gained 1.03 percent on the day, its sharpest rise since May 23, 2025, when it had appreciated 1.05 percent.

That move appears to have reset near-term expectations. Currency experts say the central bank’s “timely and visible” presence has established the 90-per-dollar level as a near-term support zone. Amit Pabari, Managing Director at CR Forex Advisors, noted that while the immediate downside pressure has eased, a sustained move above 90.50 could once again expose the rupee to the 90.70–91.00 range.

In other words, the RBI has slowed the momentum but not eliminated underlying risks.

For India, currency stability matters far beyond the forex market. A sharp or disorderly depreciation feeds directly into imported inflation, complicates monetary policy, and raises hedging costs for Indian corporates with foreign currency exposure.

By stepping in forcefully, the RBI has sent a clear signal that while it does not target a specific exchange rate, it will not tolerate rapid, sentiment-driven overshooting. This approach is consistent with the central bank’s long-standing policy of managing volatility rather than defending levels.

The intervention also buys policymakers time. With global uncertainty still high and US monetary policy remaining restrictive, emerging market currencies remain vulnerable. RBI action helps smooth the adjustment rather than allowing panic to dictate price discovery.

Further insight into the scale of RBI intervention came from a December 17 report by Soumya Kanti Ghosh, Group Chief Economic Advisor at State Bank of India. According to the report, RBI intervened by around $18 billion in the forex market during June–September 2025. Based on forward market data, SBI estimates an additional intervention of roughly $10 billion in October, taking total intervention to about $30 billion.

Interestingly, during the same period, India’s forex reserves declined by only about $15 billion. This suggests that the RBI has actively used forward market operations alongside spot interventions, a strategy that allows it to manage liquidity while limiting visible reserve drawdowns.

Ghosh also highlighted the speed of the rupee’s recent fall, noting how quickly the currency moved from 90 to above 91 before staging a sharp rebound. The sequence reinforces the RBI’s sensitivity to pace rather than absolute levels.